The aim of this study is to investigate the interaction impact of auditor industry specialization and board independence on investment efficiency. This study investigates whether board independence is more or less effective in constraining over and under investment for firms audited by industry specialists than for firms audited by non-specialists. This study applied a co-relational research design. A sample was selected of 100 Iranian manufacturing firms listed Tehran Stock Exchange (TSE) for a period of 2005-2011.Regression analysis was used to test the research proposition. The paper finds that over and under investment is more negatively associated with board independence for firms audited by industry specialists than for firms audited by non-specialists, consistent with the notion that there is a complementary relationship between auditor industry specialization and board independence. The findings suggest a positive interaction effect of auditor industry specialization and board independence on investment efficiency. This study contributes to the literature by documenting explicit evidence that high quality boards can be more effective through hiring industry specialist auditors. This study also suggests that it may be worth investigating the interaction effect among different corporate governance mechanisms and auditor industry specialization on investment efficiency.